Class 10: Sales Tax and VAT – Exercise 3(c) – ICSE / ISC / CBSE Mathematics Portal for K12 Students

In this exercise, all the prices are excluding Vat unless specified

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Question 1: A person purchases an article for Rs. 6200 and sells it to a customer for Rs. 8500. if the sales tax (under VAT) is 8%; find the VAT paid by the person.

Answer:

Cost Price of the article $\displaystyle = \text{ Rs. } 6200$

Selling Price of the article $\displaystyle = \text{ Rs. } 8500$

VAT = Tax Charges – Tax Paid

VAT $\displaystyle =$ Tax on Selling Prices $\displaystyle -$ Tax on Cost Prices

$\displaystyle = \frac{8}{100} \times 8500- \frac{8}{100} \times 6200$

$\displaystyle = \text{ Rs. } 184$

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Question 2: A purchases an article for Rs. 3600 and sells it to B for Rs. 4800. B in turn sells the article to C for Rs. 5500. If the Sales Tax (under VAT) is 10%, find the VAT levied on A and B.

Answer:

Cost Price of the article for A $\displaystyle = \text{ Rs. } 3600$

Selling Price of the article A $\displaystyle = \text{ Rs. } 4800$

$\displaystyle \text{VAT levied on A } = \frac{10}{100} \times (4800-3600) = \text{ Rs. } 120$

Cost Price of the article for B $\displaystyle = \text{ Rs. } 4800$

Selling Price of the article B $\displaystyle = \text{ Rs. } 5500$

$\displaystyle \text{VAT levied on B } = \frac{10}{100} \times (5500-4800) = \text{ Rs. } 70$

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Question 3: A manufacturer buys raw material for Rs. 60,000 and pays 4% tax. He sells the ready stock for Rs. 92,000 and charged 12.5% tax. Find the VAT paid by the manufacturer.

Answer:

Cost price of the raw material $\displaystyle = \text{ Rs. } 60000$

$\displaystyle \text{Tax paid by the manufacturer }= \frac{4}{100} \times 60000 = \text{ Rs. } 2400$

Selling price of the stock $\displaystyle = \text{ Rs. } 92000$

$\displaystyle \text{Tax charged } = \frac{12.5}{100} \times 92000 = \text{ Rs. } 11500$

VAT = Tax recovered on sale – Tax paid on purchase

$\displaystyle = \text{ Rs. } 11500 - \text{ Rs. }2400 = \text{ Rs. } 9100$

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Question 4: The cost of an article is Rs. 6000 to a distributor. He sells it to a trader for Rs. 7500 and the trader sells it to a customer for Rs. 8000. If the VAT rate is 12.5%; Find the VAT paid by the:

Distributor
Trader

Answer:

Cost Price of the article for distributor $\displaystyle = \text{ Rs. } 6000$

Selling Price of the article for distributor $\displaystyle = \text{ Rs. } 7500$

$\displaystyle \text{VAT levied on distributor } = \frac{12.5}{100} \times (7500-6000) = \text{ Rs. } 187.50$

Cost Price of the article for Trader $\displaystyle = \text{ Rs. } 7500$

Selling Price of the article for Trader $\displaystyle = \text{ Rs. } 8000$

$\displaystyle \text{VAT levied on Trader } = \frac{12.5}{100} \times (8000-7500) = \text{ Rs. } 62.50$

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Question 5: The printed price of an article is Rs. 2500. A wholesaler sells it to a retailer at a 20% discount and charges sales tax at the rate of 10%. Now the retailer, in turn, sells the article to a customer at its list price and charges the sales tax at the same rate. Find:

The amount that the retailer pays to the wholesaler.
The VAT paid by the retailer.

Answer:

Printed Price of the article for wholesaler $\displaystyle = \text{ Rs. } 2500$

$\displaystyle \text{Cost Price of the article for retailer } = \frac{100-20}{100} \times 2500 =\text{ Rs. } 2000$

$\displaystyle \text{Amount paid by the retailer } = \frac{10}{100} \times 2000 +2000 = \text{ Rs. } 2200$

$\displaystyle \text{Selling Price of the article for retailer } = \text{ Rs. } 2500$

$\displaystyle \text{VAT levied on distributor } = \frac{10}{100} \times (2500-2000) = \text{ Rs. } 50$

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Question 6: A retailer buys an article for Rs. 800 and pays the sale tax at the rate of 8%. The retailer sells the same article to a customer for Rs. 1000 and charges sales tax at the same rate. Find:

The price paid by a customer to buy this article.
The amount of VAT paid by the retailer.

Answer:

Cost price of the article $\displaystyle = \text{ Rs. } 800$

$\displaystyle \text{Tax paid by the retailer } = \frac{8}{100} \times 800 = \text{ Rs. } 64$

Selling price of the article $\displaystyle = \text{ Rs. } 1000$

$\displaystyle \text{Tax charged } = \frac{8}{100} \times 1000 = \text{ Rs. } 80$

Price paid by the customer $\displaystyle = \text{ Rs. } 1000 + \text{ Rs. } 80 = \text{ Rs. } 1080$

VAT = Tax recovered on sale – Tax paid on purchase

$\displaystyle = \text{ Rs. } 80 - Rs. 64 = \text{ Rs. } 16$

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Question 7: A shopkeeper buys 15 identical articles for Rs. 840 and pays sales tax at the rate of 8%. He sells 6 of these articles at Rs. 65 each and charges sales tax at the same rate. Calculate the VAT paid by the shopkeeper against the sale of these six articles.

Answer:

Cost price of the article $\displaystyle = \text{ Rs. } \frac{840}{15} = \text{ Rs. } 56$

$\displaystyle \text{Tax paid by the retailer } = \frac{8}{100} \times 56 \times 6 = \text{ Rs. } 26.88$

Selling price of the article $\displaystyle = \text{ Rs. } 65$

$\displaystyle \text{Tax charged } = \frac{8}{100} \times 65 \times 6 = \text{ Rs. } 31.20$

VAT = Tax recovered on sale – Tax paid on purchase

$\displaystyle = \text{ Rs. } 31.20 - \text{ Rs. }26.88 = \text{ Rs. } 4.32$

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Question 8: The marked price of an article is Rs. 900 and the rate of sales tax on it is 6%. If on selling the article at its marked price, a retailer has to pay VAT=Rs.4.80; Find the money paid by him (including sales tax) for purchasing this article.

Answer:

Let Cost price of the article $\displaystyle = \text{ Rs. } x$

$\displaystyle \text{Tax paid by the retailer } = \frac{6}{100} \times x = \text{ Rs. } 0.06x$

Selling price of the article $\displaystyle = \text{ Rs. } 900$

$\displaystyle \text{Tax charged } = \frac{6}{100} \times 900 = \text{ Rs. } 54$

VAT = Tax recovered on sale – Tax paid on purchase

$\displaystyle = \text{ Rs. } 54 - \text{ Rs. } 0.06x = \text{ Rs. } 4.80 \Rightarrow x = 820$

Money paid $\displaystyle = \text{ Rs. } 820 + Rs. 0.06 \times 820 = \text{ Rs. } 869.20$

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Question 9: A manufacturer marks an article at Rs. 5000. He sells this article to a wholesaler at a discount of 25% on the marked price and the wholesaler sells it to a retailer at a discount of 15% on its marked price. If the retailer sells the article without any discount and at each stage, the sales-tax is 8%, calculate the amount of VAT paid by:

The Wholesaler
The Retailer [2010]

Answer:

Market Price of the article for wholesaler $\displaystyle = \text{ Rs. } 5000$

$\displaystyle \text{Cost Price of the article for wholesaler } = \frac{100-25}{100} \times 5000 =\text{ Rs. } 3750$

$\displaystyle \text{Amount of tax paid by the wholesaler } = \frac{8}{100} \times 3750 = \text{ Rs. } 300$

$\displaystyle \text{Cost Price of the article for retailer } = \frac{100-15}{100} \times 5000 =\text{ Rs. } 4250$

$\displaystyle \text{Amount of tax paid by the retailer } = \frac{8}{100} \times 4250 = \text{ Rs. } 340$

Selling price of the article for retailer $\displaystyle = \text{ Rs. } 5000$

$\displaystyle \text{Amount of tax paid by the end customer } = \frac{8}{100} \times 5000 = \text{ Rs. } 400$

Vat paid by retailer $\displaystyle = 400 - 340 = \text{ Rs. } 60$

Vat paid by wholesaler $\displaystyle = 340 - 300 = \text{ Rs. } 40$

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Question 10: A shopkeeper buys an article at a discount of 30% and pays sales tax at the rate of 8%. The shopkeeper, in turn, sells the article to a customer at the printed price and charges sales tax at the same rate. If the printed price of the article is Rs. 2500; Find:

The price paid by the shopkeeper.
The price paid by the customer.
The VAT paid by the shopkeeper.

Answer:

Printed Price of the article for shopkeeper $\displaystyle = \text{ Rs. } 2500$

$\displaystyle \text{Cost Price of the article for shopkeeper } = \frac{100-30}{100} \times 2500 =\text{ Rs. }1750$

$\displaystyle \text{Tax paid by the shopkeeper } = \frac{8}{100} \times 1750 = \text{ Rs. } 140$

$\displaystyle \text{Price paid by the shopkeeper }= \text{ Rs. } 1750 + Rs. 140 = \text{ Rs. } 1890$

$\displaystyle \text{Selling Price of the article for shopkeeper } = \text{ Rs. } 2500$

$\displaystyle \text{Tax paid by the customer }= \frac{8}{100} \times 2500 = \text{ Rs. } 200$

$\displaystyle \text{Price paid by the customer }= \text{ Rs. } 2500 + Rs. 200 = \text{ Rs. } 2700$

$\displaystyle \text{VAT paid by the shopkeeper } = \frac{8}{100} \times (2500-1750) = \text{ Rs. } 60$

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Question 11: A shopkeeper sells an article at its list price of Rs. 3000 and charges sales tax at the rate of 12%. If the VAT paid by the shopkeeper is Rs. 72, at what price did the shopkeeper buy the article inclusive of sales tax?

Answer:

Let Cost Price of the article for shopkeeper $\displaystyle = \text{ Rs. } x$

$\displaystyle \text{Tax paid by the shopkeeper }= \frac{12}{100} \times x = \text{ Rs. } 0.12x$

Selling Price of the article for shopkeeper $\displaystyle = \text{ Rs. } 3000$

$\displaystyle \text{Tax paid by the customer }= \frac{12}{100} \times 3000 = \text{ Rs. } 360$

VAT = Tax recovered on sale – Tax paid on purchase

$\displaystyle = \text{ Rs. } 360 - \text{ Rs. } 0.12x = \text{ Rs. } 72 \Rightarrow x = \text{ Rs. } 2400$

Tax paid by the shopkeeper $\displaystyle = 0.12 \times 2400 = \text{ Rs. } 288$

Price paid by the shopkeeper $\displaystyle = 2400 + 288 = \text{ Rs. } 2688$

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Question 12: A manufacturer marks an article for Rs.10,000. He sells it to a wholesaler at a 40% discount. The wholesaler sells this article to a retailer at a 20% discount on the marked price of the article. If a retailer sells the article to a customer at a 10% discount and the rate of sales tax is 12% at each stage, find the amount of VAT paid by the: